Strata Improvements 06: Fixing What’s Broken in Strata Buildings

Or, why we're not playing with Lego …

Even though strata buildings must fix everything completely, without exceptions and immediately, and, they are liable to strata owners and others for not doings so, most of the time repair and maintenance happens quite lethargically.  So, there’s a disconnect between strata laws, reality, perceptions, expectations and outcomes that creates a lot of disappointing artificiality.  It’s time to grow up and stop playing strata Lego.

[11.00 minutes estimated reading time, 2171 words]

Introduction

I’ve previously written about the importance of the building structure in a strata title corporation in my article Strata Improvements 04: There’s nothing common about this strata property.

In this article, I’m covering the ongoing and never-ending job of maintaining, repairing, and replacing common property building structures, the exposures those obligations create, some reasons why the system isn’t working properly, and, some ideas for improvements.

Building maintenance, put simply, refers to activities performed to retain and restore the functionality of buildings. It includes tasks such as cleaning, landscaping, security, etc as well as inspecting, repairing, maintaining, and replacing the component parts of buildings.  It aims to preserve a safe, functional, and comfortable environment for tenants at all times

Sounds simple, doesn’t it? But, in practice, it’s not always that easy or effective to get that done in strata buildings.

Why is that?  How can the challenges be overcome? And, what legal and other changes should be made to improve things?

Obligations to fix strata buildings

Strata buildings are obligated to maintain, repair, and replace the common property and are liable for orders to do so when they don’t.  They are also exposed to damages and other claims from lot owners and others for not doing so.

It’s an important obligation because, fundamentally, if strata buildings are not intact and functioning properly then, strata owners’ property titles, their investment values, and, the amenity of the lots and common property are directly negatively impacted.

Over the longer term, major parts of the building [like facades, windows, rooves, etc] and important equipment in it [like elevators, HVAC, water tanks, fire systems, etc] will also need to be replaced to preserve structural integrity, weatherproofing, access, and, safety.

Plus, since strata buildings [and more importantly for strata owners; the strata lots] will exist forever, a strategy of putting off that work can’t last indefinitely.

There are also plenty of Court and Tribunal decisions about strata building repair, maintenance, and replacement obligations that have established a few key principles as follows.

1.     That strata building repair and maintenance obligations are compulsory, and not optional or discretionary.

2.     That strata building repair and maintenance obligations are absolute, in that they are not just to use reasonable care or act reasonably, but to do whatever is necessary.

3.     That strata building repair and maintenance obligations are strict so strata buildings must maintain things so they are good and serviceable.

4.     That strata building repair and maintenance obligations arise as soon as the fault occurs [even if the strata building doesn’t know about it].

5.     That strata building repair and maintenance has to be done even if the faults or what caused the need for the work were caused by someone else [like original construction building defects].

6.     That strata building obligations about repair and maintenance are owed to each strata owner and entitles them to recover damages.

Having watched these principles applied in strata buildings over decades to support the strict nature of repair and maintenance obligations, there are situations where that strictness could be relaxed [or at least the impracticability acknowledged].

The principle that strata building repairs and maintenance must happen immediately on the building developing the fault is impractical and artificial. 

It’s typical that building faults are not identified for some time after they’ve developed because they are hidden [sometimes visible only in lots or behind other structures], don’t manifest themselves visibly for some time, and, are hard to diagnose properly.

It’s also true that arranging for repair or maintenance work to be done can take some time because it involves things like diagnosing the fault, scoping the works, quoting [sometimes from multiple parties], strata approval [often requiring strata meetings], regulatory approval and compliance, contracting, contractor lead and set up times for the works, and, weather delays.

It would therefore be much better that strata laws recognise these practical issues rather than pretending that strata buildings can know about and fix faulty common property instantaneously.  That’s even if the legal obligations to do so stay exactly the same.

So, I suggest that the strata laws include a qualifier to the strict duty to maintain, repair, and replace common property that allows strata buildings a reasonable time to effect the necessary works given the circumstances applying at the time. 

And, even if the strata laws don’t cover that, I suggest that strata buildings let everyone know about the repair works, likely delays, and the reasons for them: so, there’s transparency and to properly manage expectations.

Exceptions to repairs and maintenance obligations

There are a few limited exceptions to strata building obligations about repair and maintenance that have been permitted in strata laws and by Courts or Tribunals as follows.

• In some states, if strata buildings decide by three-quarter majority votes not to do the work, they don’t have to provided it doesn’t impact safety, structures, or appearance.

• In some states, where there is legal action about common property damage [like a building defect claim], strata buildings can defer maintenance, repair, and replacement of the affected parts of the building until that legal action is finished provided the delay doesn’t impact safety, structures, or appearance.

But, these exceptions are very limited and are strictly conditioned. 

I can think of [and have seen] many other situations where a delay in works to repair or maintain the common property is appropriate, the delays that are not forever or for too long, and/or, they are not dependent on there being legal actions that are building specific or affected by environmental or economic circumstances.  Think about the complications in getting repairs done after a natural disaster [like a cyclone or flood], and, remember what happened to tradespersons’ availability during Covid.  And, what about delays caused by legal actions for access to strata lots that hold up common property repair works?

It’s also obvious that faults in common property cannot be dealt with immediately on awareness. So, there will always be delays for good reasons [like proper investigation, sourcing repairers and co-ordinating the works, etc] and sometimes for bad reasons [avoidance, lack of funds, incompetence or negligence, perversity, etc].  But, strata building liability for delays is not circumscribed by the circumstances and reasons when it should be relevant.

It would be much better that strata laws recognise that strata buildings may have a range of good reasons to legitimately delay repair and maintenance works and those reasons should modify their repair and maintenance obligations.

So, I suggest that the strata laws include more options for strata buildings to decide to delay or modify their strict duty to maintain, repair, or replace common property provided the delay is not permanent and is based on a strata owners’ decision, supporting facts, and, is reasonable.

What if strata buildings don’t fix things?

What happens when a strata building doesn’t fix things; either at all, properly, or, too slowly?

Well, nothing really unless someone [typically a strata owner] takes action about it for the reasons I explain below.

Firstly, there’s no official overseer of strata buildings who checks on their condition and does anything about it.  So, strata buildings are largely self regulating.

Sometimes local councils will issue orders against strata buildings to fix things [usually about fire safety matters] but that’s rare.  And, interestingly and ironically, building insurers are beginning to require strata buildings to repair or replace common property as a condition to ongoing insurance coverage to reduce their [the insurer’s] future risk and exposure.

So, often, it’s only regulatory or commercial pressure that gets applied at a macro level to strata buildings that gets them to fix things.

Secondly, strata owners [and sometimes other stakeholders] can seek orders from specialist Tribunals and Courts the strata buildings to fix things.

But, whilst specialist strata Tribunal processes are consumer friendly, it’s still legal action over technical building issues that normal people need to navigate.  Which isn’t easy.  Plus, legal actions can take a long long time to finalise whilst the building remains unrepaired.  And, often strata buildings engage lawyers to defend the actions; further complicating things and increasing the cost to everyone.

Nevertheless, Tribunal orders requiring strata buildings to fix things do get made and are effective, so they are a necessary and useful mechanism.  It’s just a shame they are so hard to get, take so long, and, cost so much.

Thirdly, strata owners and others can claim damages from strata buildings for damage, injury, or, losses they suffer as a result of a failure to or delays in performing common property repair works. 

Those kinds of strata damages claims are usually based on one of two legal principles.

• For claims made by strata owners for unrepaired common property, they’re typically based on a breach of statutory duty to repair the common property.

• For claims made by strangers when they get hurt or things are damaged on common property, they’re usually based on a breach of the duty of care in negligence.

However, these kinds of actions involve legal proceedings in Civil Courts and are even more legally complex, expensive, and slow.  So, they’ve been fairly uncommon around Australia unless there have been major losses.

In, NSW, there are now easier claim options in the specialist strata Tribunal [NCAT] for strata owners’ damages that have opened things up a lot as I’ve written about in Is there a Strata Damages Gold Rush in NSW? Or, easy compensation for strata owner losses …

Because the NSW strata damages processes are being used a lot, they are starting to make strata buildings pay for the impacts of not doing or delaying common property repairs and maintenance; effectively applying a kind of ‘true economic cost’ penalty to them.  Which isn’t a bad thing.

Thirdly, in worst case scenarios, specialist Tribunals and Courts can appoint an administrator or compulsory manager to take over a strata building when it becomes dysfunctional, is in crisis, or, avoids major works, to get major repair or maintenance works done.

But, this kind of solution is even less common.

It also involves all the processes, complexity, time, and, cost of other legal actions and by the time that kind of solution has become necessary the situation in the affected strata building is very serious.

So, it’s essentially a last straw solution before strata stakeholders are homeless, bankrupt, or both.

That means that unrepaired strata buildings usually stay that way for a long time until someone forces things to be done by regulatory, commercial or legal pressure.  And, by then the faults are worse, the cost to fix them is higher, there’s money and time wasted on the processes [by everyone], and, strata stakeholders have suffered inconvenience, loss of amenity, and, financial impacts.

So, I suggest that the strata laws around Australia include the simpler and easier claim options that NSW has introduced for strata owner damages claims to make it easier for affected stakeholders to get redress and to make the true economic cost more obvious to strata buildings.

I also suggest that specialist strata Tribunals do two things:

• They provide a ‘fast track’ system for applications for orders about common property repairs so they are determined more quickly/

• They appoint neutral ‘technical’ advisors to assist the Tribunals in deciding about what work is necessary and appropriate.

Conclusions

There’s no doubt that strata corporations must do everything necessary to keep the strata building in good condition to preserve its structural integrity and longevity, maintain property values, appropriately spend strata owners’ money, preserve amenity in the building, and, avoid liability for damages and other claims.  And, strata buildings should be liable for the consequences of not doing so.

Otherwise, strata stakeholders’ short-termism means strata buildings will avoid, delay, or limit repair and maintenance works.

So, sadly, it looks like only serious legal and financial pressure gets strata buildings to properly maintain and repair things: from local council orders, strata insurance company pressures, and, exposure to strata damages claims from owners.

But, there’s an artificiality to the strictness of those obligations that don’t recognise or properly allow for the realities facing strata buildings around knowing about faults in the building, determining the best way to fix faults, and, getting the works [and necessary access] organised and done.

So, it makes sense that in the right circumstances, strata owners can reasonably decide to modify or delay common property works provided everyone knows that’s happening and can make their own ownership and living decisions based on those things.  Rather than hoping that the strata building will fix things promptly.

It feels to me that there needs to be a more intelligent focus on strata building repair and maintenance to get it done properly whilst recognising the practical and technical realities facing the stakeholders.

October 10, 2022

Francesco ...